Last July, I wrote in my Statehouse Update that, in a typical year, both chambers of the state General Assembly passing the same budget legislation “would imply the hard work of negotiating is over and an agreed-to budget is on its way to the governor to be signed into law.” As it turned out, the 2023-24 Pennsylvania state budget ultimately wasn’t finished until December, and arguably portions of it even then were not fully agreed upon.
Now as I write this July update for 2024, I can report that unlike a year ago, negotiations between legislative leaders and the governor have reached a more or less timely conclusion – and happily, one in which PFMA can boast numerous victories.
Education spending was the defining issue for Governor Shapiro and lawmakers this year, due in large part to a state court ruling that found the commonwealth unconstitutionally underfunds public school districts.
The budget agreement, which was signed by the governor on July 12, dedicates an additional $1 billion to K-12 schools throughout Pennsylvania. And while education funding is the headline in the press, a number of really important items for PFMA and its membership were passed as well.
We have just about crossed the finish line on legislation authorizing licensed retailers to sell ready-to-drink “canned cocktails.” A longtime PFMA priority, enabling legislation now sits on the governor’s desk awaiting his signature, and his office has indicated he will sign the bill. The result of intense advocacy, negotiation and compromise, SB 688 by Sen. Mike Regan (R-York) would settle one of the most gaping inconsistencies in Pennsylvania’s alcohol laws by allowing retailers to sell spirit-based RTDs.
In fact, it is shaping up to be a very good year for alcohol reform in PA. Omnibus liquor reform legislation HB 829 has been signed into law, and among its numerous provisions, the bill reauthorizes the Pennsylvania Liquor Control Board’s(PLCB)  backhaul program. Under that program, which was abruptly phased out several years ago, wholesale licensees were provided a discount for picking up their purchases at PLCB-specified locations. The reinstatement of this program represents a significant win for PFMA members involved in alcohol sales, who will see substantial savings by once again receiving a discount for collecting their own alcohol shipments.
Pharmacy Benefit Manager reform has also been a key issue for PFMA. Throughout the spring we have worked with members of our pharmacy council, lawmakers and other stakeholders on comprehensive reform legislation that addresses some of the most egregious problems facing grocery and independent pharmacies, such as price steering and spread pricing. We are happy to report HB 1993 emerged as the legislative vehicle containing many of the reforms we have advocated, and that bill is on the governor’s desk as well.
Also included in the budget was $2.72 million in funding to support the operations of the state attorney general’s new Organized Retail Theft Task Force. The task force was established as part of PFMA’s ORC legislation which passed in December 2023. The task force officially came online July 1, along with new thresholds for the crime of organized retail theft. PFMA’s loss prevention committee has and will continue to meet with OAG task force staff and we are extremely pleased with the level of commitment reflected in this funding amount.
Other significant provisions of the budget for PFMA include $2 million to reboot the state’s Fresh Food Financing Initiative (FFFI), a statewide public-private financing program that helps business owners open or expand healthy grocery outlets in communities throughout the commonwealth, a new tax credit program to incentivize employers to reimburse employees for childcare expenses, and funding to administer a summer EBT program, which Pennsylvania has dubbed SUN Bucks.
When it comes to tax policy, PFMA also worked hard on making sure net operating loss carryforward language was included in a final budget this year. Pennsylvania was one of only two states to limit net operating loss deductions to a lower level than the federal limit of 80 percent – in the commonwealth the deduction has been capped at 40 percent of taxable income. The budget agreement includes a tiered increase to the NOL cap that will ultimately bring Pennsylvania in line with the federal limit. Economic development was a big winner this year. Lawmakers also approved Gov. Shapiro’s PA SITES proposal, including in the budget language authorizing $500 million to provide grants or loans to developers or local government agencies so they can prepare sites for industrial or mixed-use projects.
Elsewhere, PFMA’s work to bring fairness to the realm of swipe fees gained real traction following a successful committee vote in May on HB 2394, legislation that would prohibit interchange fees from being charged on the sales tax portion of electronic transactions in Pennsylvania. The bill is now before the full house for consideration.
The association is also working on expanding Pennsylvania’s vendor discount. In 2016, as part of that year’s budget agreement, a cap was instituted on the rebate businesses have traditionally received for remitting sales tax collections of any amount to the commonwealth. Since that time, no matter how much they remit, businesses are limited to the lesser of 1 percent of the tax collected or $300 annually. PFMA has helped develop legislation that expands the discount to help offset the additional expense incurred by businesses when they collect state sales tax. Bills have been introduced in both the house (HB 2278) and senate (SB 1225).
PFMA was also proud to support HB 2357, legislation establishing the Pennsylvania Healthy Food Bucks Program, which passed the house in June with a strong bipartisan vote. We also supported HB 2886, explicitly applying immunity to the donation of food that has exceeded the manufacturer’s recommended label code date but is still fit for human consumption. That bill passed the House unanimously in early July. Both go next to the Senate for consideration.
So while PFMA members can enjoy the fruits of a successful state budget, there is always more work to do, and the association will continue to press ahead with its legislative agenda to bring home more wins for the food and beverage industry in Pennsylvania.
